This blog is written by a former Canada Revenue Agency (CRA) Employee of the Year who worked in, managed and trained CRA's Collections Department staff for almost 11-years. inTAXicating provides information, support and solutions for everything CRA related, including but not limited to; Collections, Enforcement, Audits, Liens, Back-Filing, Assessments, Director's Liability, s160 Assessments, Taxpayer Relief, Voluntary Disclosure, Bankruptcies, Proposals, Mortgages and diagnosing and solving the most complex of tax problems. Contact us for a free consultation! Should you need to hire us, you will find us to be Experienced, Honest and On Your Side. Email us at info@intaxicating.ca, and let's begin solving your tax problems together!

Tag: Goldhar

What Do Lionel Messi, Cristiano Ronaldo and Floyd Mayweather have in common aside from being top atheletes in their respective sports, and extreme wealth?

Tax Troubles!

Ronaldo and Messi with the Spanish Tax Authroity, and Mayweather with the IRS, which just goes to show you that no matter how much money you have, or don’t have, you still have to report income, file on time and pay your taxes!

In Ronaldo’s case, the Spanish Hacienda tax authority believes Ronaldo failed to pay €14.7 million in taxes pertaining to income earned on his “image rights” between 2011 and 2014. The belief is that he used (and still uses) a shell company in the British Virgin Islands and Ireland, to hide at least €78m in image rights.

Ronaldo’s camp claim that he has fulfilled all his tax obligations, maintaining that the majority of his image-rights income is earned abroad and therefore not liable for Spanish tax.

How does Ronaldo’s situation differ from Lionel Messi’s tax case?
Barcelona star Lionel Messi and his father Jorge were found guilty of tax fraud in July 2016 after it was found they had hidden image-rights income from the Spanish authorities. Messi was fined €3.6m and sentenced to 21 months in prison (which was suspended) for defrauding €4.1m between 2007-09.

The Messi family had previously paid over at least €10m in back taxes and charges, long before their case made it to court.

In Messi’s case, the court determined there was a total failure to fill his tax obligations on image rights income.

A huge concern stemming from the The Supreme Court’s judgement in the Messi surrounded the role that Messi’s tax and financial advisors played and how both parties were not indicted as part of the prosecution since they there was evidence that they advised the player on how to evade taxes.

In Spain, a guilty verdict for an aggravated tax crime means a mandatory jail time of two to six years, while conviction of the lesser offence brings a suspended sentence. If Ronaldo admits to the details in front of the judge within two months after being accused, and pays over the amounts allegedly defrauded, his punishment could be reduced.

Messi’s 21-month prison sentence for tax fraud was reduced to a €252,000 fine, while his father’s 15-month prison sentence was reduced to a €180,000 fine.

These fines are in addition to the re-payment of the taxes originally owing plus any penalties and interest accrued to the balance.

Floyd Mayweather, and his estimated net worth of $340 million is in trouble with the IRS and has apparently filed a petition asking for a temporary reprieve from unpaid taxes from 2015 until after his fight with Conor McGregor in August.

Apparently, while he has substantial assets, those assets are restricted and primarily illiquid. The upcoming fight against McGregor, however, would provide Mayweather with enough liquid cash to pay the IRS debt from 2015 in full.

Mayweather, made $220 million alone from his 2015 fight against Manny Pacquiao. It is unclear how much he owes the IRS in taxes. Given a 15-month lapse since the 2015 tax due date, Mayweather would owe 7.5% in penalties plus accruing interest on top of what he was already scheduled to pay.

Forbes estimated Mayweather’s net worth at $340 million in January.

So the moral of the story is this;

Not everyone wants to pay their taxes, and some will go to great lengths to reduce or avoid paying taxes. If that is something that you feel you must do, you have to be prepared for the consequences of your actions when and if the government comes back to you.

File on time.

Pay on time.

Don’t pay the government more than you should.

If you need help because you’re carrying a balance with the CRA and you want to discuss options, contact us today!

The changes proposed by the Canada Revenue Agency (CRA) to the Voluntary Disclosures Program (VDP) have been described as an improvement, but no where close to what is needed to reduce tax evasion, according to The National Union of Public and General Employees (NUPGE) – one of Canada’s largest labour organizations.

VDP, as we all know, gives Canadian taxpayers who made mistakes or hid income on their taxes the opportunity to voluntarily come forward to the CRA and declare or correct the mistakes without fear of prosecution, and gross negligence penalties.

Some, however, feel the VDP has been overly generous in cases such as the deal offered to clients of the KPMG Isle of Man tax scheme. The same people also believe that the CRA’s VDP has failed to differentiate between those who simply made errors in their tax return and “wealthy individuals” who wilfully evaded taxes using offshore tax havens.

While it can be very difficult to distinguish between someone who willfully evades taxes from someone who tried to but got caught, it is quite clear regarding the use of tax havens because either you report your offshore income (legal) or you don’t (illegal).

The union strongly believes that those caught “using a tax haven should be treated more severely than innocent mistakes.”

The Minister suggested that releasing the names of the participants and their advisors should be required although the CRA has always kept track of both scenarios once the disclosure has been approved. Where a taxpayer received assistance from an advisor in respect of a VDP application, the name of that advisor should generally be included in the application.

The union expressed concern that the proposed changes fail to restrict access to voluntary disclosure in cases where leaks about tax havens are likely to provide the government with lists of Canadian account holders. They feel that at that point, “it should be too late for wealthy individuals to take advantage of the VDP if they are already likely to be exposed.”

While I do agree the government should look at how they treat those who have not filed differently than those who store money offshore in hopes of evading the paying of taxes, I do not agree that in each and every case it is the “rich” or “wealthy” who are doing it.

In fact, I have encountered many Canadians of all races, religions and levels of income who have stuffed away money overseas and they range from being super-wealthy, to single parents on OAS or pension income who can barely make their rent. It’s not just a “wealthy” issue.

Sure, it doesn’t read as well if its not an attack on the “rich” and yes, there are some who have complained that nowadays it is the unionized worker who is the “rich” in Canada, which is why I prefer to not paint everyone with the same brush, and group by filers and non-filers.

Under the program, any use of a tax haven scheme should mean less relief than for other forms of non-compliance, which makes a lot of sense.

For the union, they believe that; “the majority of Canadians feel that there are two tax systems, one for the rich and one for the rest of us. It is very important for the government to get this right.”

NUPGE: Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good.

Here are the answers to the most frequently asked CRA Tax collections questions from the past weekend:

Can you bribe a CRA officer in Canada?

Answer: NO.

First off, bribing a CRA officer is a criminal offense and you could quickly wind up with the RCMP at your door, or under investigation, but more realistically, the staff at the CRA tend to be lifelong civil servants and one of the great benefits of working in the civil service is the great pension. Few civil servants are willing to even entertain the thought of giving up their pensions, let alone going to jail for someone when they have hundreds of other people to collect from.

2. Is there GST/HST on a lien?

Answer: Let’s presume that the question is asking if there is additional GST / HST on a lien, and the lien has been registered by the Canada Revenue Agency (CRA). In that scenario, the answer is no.

The CRA would register a lien for unpaid or unfiled (and assessed) GST / HST, and the amount used for the lien is the amount owing on the day it has been registered in Federal Court. This fact is important because from that day forth, interest continues to accrue and accumulate on the tax account with the CRA, but the lien only reflects the amount owing at a point in time.

Often, a lien will get paid out and then the CRA’s computer system kicks out an update Notice of Assessment with an additional balance owing and taxpayers are puzzled having just paid off a lien.

“If you use a motor vehicle for both employment and personal use, you can deduct only the percentage of expenses related to earning income. To support the amount you can deduct, keep a record of both the total kilometres you drove and the kilometres you drove to earn employment income. We consider driving back and forth between home and work as personal use.”

Since today is Thursday, I thought a Thursday Thirteen themed post might be a good change of pace!

Here are 13 things that should NEVER be said to someone with a tax problem, from someone who claims to want to help (or just your money).

Each quote below was an actual quote uttered by a tax solution representative or accountant to a prospective client in my presence.

Sit tight, and get ready to shake your head in disbelief…

13. “GST, HST, PST… They’re all the same.”

12. “CRA Collectors don’t care about you. They treat their clients like a ‘whack-a-mole’ game. You pop your head up and they smack you on the head with a hammer. We provide you with a helmet or advise you to stay underground until the game is over.”

10. “I can tell you for a fact that the Auditor General requires the CRA to close files, NOT collect money. The benchmark is 7-years. We can close your file in 7-years!”

9. “You’re just a little guy! Nobody cares about you.”

8. “If you tell the CRA anything you are shooting yourself in the feet. That’s dumb and it hurts.”

7. “I know the CRA have won in Tax Court, but they are wrong, and this time we have everything we need to prove them wrong!”

6. “Just ignore them and it will all go away.”

5. “You don’t need to speak to a Tax lawyer, or an accountant. They’re useless. You should never talk to the tax preparer. Just pay us $5,000 and we can make it all go away.”

4. “The Taxman…”

3. “I don’t care what the CRA wants, and how soon they want it. They’re getting what I want to give them, when I’m ready to give it to them, AND they’re going to see that I’m right and they are wrong.”

2. “We need to reduce the amount that you owe, so I’m going to create a T2200 for you, and claim a lot of expenses that your employer has not deducted like mileage, phone, and parking. They’ll never know its not true and on the off-chance that they ask, I have hundreds of parking receipts in my car I can give them. It’s perfectly fine…”

“Don’t even bother opening that envelope… Just throw it out.”

Just missing this list, but barely, is the commonly uttered line; “Quick, transfer the house out of your name before the CRA registers a lien against it!”

The Taxpayers’ Ombudsperson, Sherra Profit has announced that the Office of the Taxpayers’ Ombudsperson (OTO) will be undertaking an examination into the systemic issue of the Canada Revenue Agency’s (CRA’s) practices regarding providing legal warnings to taxpayers when collecting unpaid taxes.

Obviously, the OTO have received many complaints alleging that staff at the CRA have been taking legal actions – freezing and seizing funds from bank accounts, garnishing wages, taking refunds – without notifying taxpayers first, or without working to make a payment arrangement first.

Oh oh.

Apparently, the purpose of this exercise is to allow for the Ombudsperson to identify the current process the CRA uses in order to take legal actions, specifically to see if the notice being given is “sufficient”.

Additionally, there will also be a review of whether the CRA clearly identifies their entire collection process on their website.

Is it clear enough for the average Taxpayer to understand not to carry a balance with the CRA?

After the examination, the Taxpayers’ Ombudsperson will make her findings public in a report.

For those of you not familiar with the Office of the Taxpayers’ Ombudsperson (OTO), they “work to enhance the Canada Revenue Agency’s (CRA) accountability in its service to, and treatment of, taxpayers through independent and impartial reviews of service-related complaints and systemic issues”.

The website can be found here; https://www.canada.ca/en/taxpayers-ombudsman.html

The OTO wants to initiate systemic examinations when complaints or questions are raised about a service issue that may impact a large number of taxpayers or a segment of the population, in order to keep on top of the pulse of Taxation and the CRA here in Canada.

Recommendations arising from these examinations are aimed at improving the service provided to taxpayers by the CRA.

Quotes“While the CRA’s collections practices and collections officers’ behaviours are some of the most common complaints received in my office, we have received more specific complaints about the legal warnings aspect. CRA collections officers generally try to work out an acceptable payment arrangement that will allow taxpayers to avoid undue financial hardship. Taxpayers who contacted my office indicated they were taken by surprise, and said they have faced financial hardship and stress because of the lack of notice prior to CRA taking legal action.”

Sherra ProfitTaxpayers’ Ombudsman

Well…

Let me tell you, Office of the Ombudsperson, that there are 3 important pieces to the puzzle that you do not know about or have overlooked;

The issuance of the Notice of Assessment (NOA) comes with legal warning built right into the notice. As the CRA’s collectors will tell you over and over again, the CRA is not a bank and thus, by issuing the NOA the CRA is demanding payment in full. If, for whatever reason, a taxpayer cannot make payment in full, they are expected to contact the CRA and let them know.

Recent attempts by the CRA to lower their workloads resulted in the creation of New Intake inventories where by the collectors were advised and trained to take immediate legal action against a taxpayer once the 90 days grace period granted upon the issuing of a Notice of Assessment has passed. Day 91 = legal action.

Trust accounts, situations where trust funds are due to the CRA as due right away and no collection restriction applies, ie/ jeopardy.

The answer here might include spelling out information on the CRA website a touch more clearly, and it should include having it in a few more places, maybe flashing and more noticeable because to educate and inform each and every Canadian Taxpayer all the time so everyone knows, just is not feasible.

Personal experience working at the CRA has afforded me a much different view of the CRA’s legal warning procedures and when I compare how I handled files to how others did, I get it… There are issues.

I cannot tell you the number of times I gave verbal legal warning, followed that up with written legal warning, then followed that up with another call and then upon freezing a bank account, got that call of surprise and shock.

However, I do know of a few others who froze bank accounts and instead of sending the legal document to freeze the account to the bank and the Taxpayer on the same day, held on to the Taxpayer’s copy for an extra day or 2 in order to prevent the Taxpayer from getting the notice first and emptying his / her bank account.

It’s not as clear as one might want it to be…

OTO… You’re going to be so disappointed with what you find, but you need to understand before you try to make the CRA A kindler and gentler place that everything is already in place, policy and procedurally, to do just that.

It could just be that people who are not informed do not feel they have a person or place to ask questions without fear of reprisal!

Warren Orlans, the Director of inTAXicating Tax Services has completed his Profitable Giving Specialist accreditation which certifies that he is able to demonstrate understanding and proficiency in each of the following 4 areas;

The Tax Shelter Industry in Canada

The Regulations: Promoter Liability and Penalties, Third Party, and Civil Liability

Registered Profitable Gifting Arrangements and the Law

The Role of the Canada Revenue Agency in Regulating RPGAs

In addition to assisting Canadian Taxpayers who have fallen victim to Tax Shelter scams like the Global Learning and Gifting Initiative (GLGI), the Canadian Organization for International Philanthropy (COIP), the Relief Lending Group (RLG), Mission Life Financial Inc (MLF), Pharma Gifts International (PGI) and Integrated Receivables Management Inc / Integrated RM Inc (IRM).

inTAXicating provides Canada’s only full tax solution to assist Canadians solve all of their tax problems, including ones brought on by participating in tax shelters.

Below is only a snapshot of how to view a CRA debt related to a Tax Shelter / Gifting Arrangement and some of the options to start resolving the issue(s).

In order to reach a solution for Canadian Taxpayers the following things must be considered;

Ability to Pay according to you and,

Ability to Pay according to the CRA.

From there, you have only a few options;

Do nothing

Resolve the balance outstanding

Fight the CRA

Should you choose to resolve the balance outstanding, you again have only a few options;

Pay the balance in full

Ask the CRA for a payment arrangement, and prove you need one

Wait for the CRA to take it from you.

File a Consumer Proposal

File for Bankruptcy.

Keep in mind that the CRA does not “settle” debts like the IRS does. The only way to “settle” or pay less than the full amount of tax, penalties and interest, is through bankruptcy or a proposal.

While all of the Collections matters are in process, you are entitled to file for Taxpayer Relief and ask the CRA to return some or all of the penalties and / or interest which it has charged you. This application should be devoted time and effort to complete. It should never be a cookie-cutter application written by someone else because the CRA sees those and mass-denies them. Anyone trying to sell you a cookie-cutter application knows this and is “helping” you for the money and not because it’s the right thing to do.

Taxpayer Relief does not hold back Collections for doing what Collections does – trying to collect a balance owing – nor do CRA Collections care that a Taxpayer Relief application has been submitted.

A CRA review of a Taxpayer Relief Application can take upwards of a year. Be prepared for that delay and the interest that accumulates on your tax account should you wait to pay it later.

Having a trained set of eyes look over and edit a Taxpayer Relief application is a great idea because if you’re taking the time to submit an application, you want to make sure that you are putting your best work forward.

But ultimately, when looking at your options… All of your options, you want to make sure that your interests are being looked after first. You need an expert in CRA Collections, in Tax Shelters, and who can assist you with accounting, refinancing, insolvency and proposals and who can give you the best advice, the most cost effective advice and the advice that they would take if they were in your shoes.

inTAXicating Tax Services is that organization and we’re here to help you with all of that, and so much more. We associate ourselves with like-minded professionals who also understand that you are the client and that you need assistance and service.

If you have any questions about any tax shelter that you may have been involved in, and you need to know your specific options, contact us at info@intaxicating.ca

If you are fighting a losing battle, find your most successful competitor and do what they do!

If you are one of the many people who have paid tens of thousands of dollars to a prominent tax lawyer because they told you a lawyer was absolutely required to save you from the “taxman,” you are going to be really disappointed to learn the firm itself no longer feels that way.

As a result of a drawn-out and very public dispute with the Law Society of Upper Canada over their retention of client retainer fees to keep them from the reach of the Canada Revenue Agency (CRA), DioGuardi Tax Law has been forced to reinvent themselves into our firm, inTAXicating, by saying when people owe tax to the Canada Revenue Agency, a lawyer is no longer the most effective choice for ending the problem.

Oops.

From their press release, Philippe DioGuardi is reported to have said “People who owe tax are vulnerable to the Canada Revenue Agency’s aggressive collection tactics. They need fast and affordable ways to fix their tax trouble before the CRA comes after them with bank and wage garnishments or liens against their home and other property.”

Something I have been saying for the past 10 years!

In an effort to possibly save their business, the press release goes on to explain that hiring lawyers for CRA collections matters is time-consuming (read: expensive for clients) and slow: “They know what I know about fighting the CRA. And because they’re not lawyers, they can work more quickly to end people’s tax debt trouble for less than a lawyer would charge. Frankly, when the trouble is that you owe tax, you don’t need the hassle of hiring a lawyer to fix it.”

Unfortunately, the aggressive negotiation tactics DioGuardi’s firm is known for and which the CRA despises are still at the centre of their campaign. They also boast a network of resources to assist people who need help with financing, and to slide people into bankruptcy when they cannot get financing.

DioGuardi’s previous radio advertising warned Canadians against searching for Tax Solutions on the Internet (so you will not find answers or firms like inTAXicating) and against so-called Tax Solutions firms, which are really Bankruptcy firms offering to “help” you with your tax debt by plunging you into bankruptcy after drawing out your tax file to incur more fees.

So inTAXicating now has a little competition … kind of … in the field of tax solutions and assistance with CRA issues. You can either choose 17 years of tax experience – 11 of which were spent recently working in and managing CRA collections – or you can choose a firm which used to believe only lawyers can solve tax problems, but now tells you lawyers are not needed to solve tax problems, and oh, hey, they also used to work somewhere in the CRA 25 years ago.

Once this model wears out, watch for them to morph into Tax “Brokers” so they can do the work, and get paid after the fact, all in an effort to “protect” your money from the “Tax Man”. It’s all the same everything, just dressed up in different clothing.

For us, nothing has changed.

If you have a tax question, issue, lien, or concern with the CRA, or RST, or need help regarding an audit or Taxpayer Relief, or just want to ask a tax question, then send an email to info@intaxicating.ca and you will have your answers. If you need to hire us, we’ll tell you. If you can handle it yourself but need a little guidance, we will tell you.

About inTAXicating

This is the blog for inTAXicating.ca

inTAXicating was created by Warren Orlans, a Canadian Tax Consultant and former Canada Revenue Agency (CRA) Employee of the Year who worked in the CRA for almost 11-years in their Collections Department.

inTAXicating provides expertise in the area of Tax Liability Solutions and assisting Canadians to understand how the CRA operates.

In order to provide you with the best Tax Solution services possible, we work with Mortgage Brokers. Tax Lawyers, Accountants, Bookkeepers and Insolvency Practitioners to ensure that you get the best experience during a difficult time as you fix your tax problems.